Is Tesla's Gigafactory a Gigablunder for Panasonic?

TOKYO — Panasonic outperformed the forecasts of most analysts and reported on July 31 a 28 percent increase in operating profit for the latest April-June quarter. The Japanese company, on the same day, announced that it has signed a deal with Tesla on a large-scale battery plant in the United States, known as the Gigafactory.

The announcement comes as no surprise to the automotive industry, since Elon Musk had been publicly courting Panasonic -- which already supplies batteries to Tesla -- to join Tesla in building a lithium-ion battery factory.

One glaring omission in a joint press release prepared by the two companies, however, is exactly how much Panasonic is prepared to shell out in its Gigafactory investment.

Tesla previously said that it will invest up to $5 billion in the factory by 2020, with plans to churn out enough lithium-ion batteries each year to power 500,000 electric vehicles.

Under the agreement, Tesla will pay for land, buildings and utilities. Panasonic will only have to foot the bill for the machinery needed to make the battery cells. Still under discussion are details on implementation, including sales, operations and investment, according to the press release.

The joint press release also noted:

The Gigafactory will produce cells, modules and packs for Tesla's electric vehicles and for the stationary storage market. Plans call for the Gigafactory to produce 35GWh of cells and 50GWh of packs per year by 2020. Tesla projects that the Gigafactory will employ about 6,500 people by 2020.

Tesla appears to believe that the Gigafactory won’t be able to produce enough batteries to meet the projected demand for cells. Tesla, according to the press release, will continue to purchase battery cells produced in Panasonic's factories in Japan.

All eyes are now on Panasonic, awaiting its next move.

The question both inside and outside the Japanese company is this: how big an albatross might the Gigafactory become for Panasonic — in short, medium and long terms.

Some Japanese electronics industry sources question the wisdom of going all in with Tesla. As sexy as this partnership might sound, Tesla, in Japanese eyes, is no Toyota.

The next energy source technology appears to be quite near now ( after a half century :-( ). I'd wait a while to see what Rossi's ECAT technology, Nanospire's sonofusion devices, Blacklight Power's hydrino technology and a dozen other technologies on the horizon will occur. I'm quite sure that all devices from cell phones, vacuum cleaners, jet aircraft and cars will be entirely self contained with no charging or refueling required. These technologies are imminent in a relatively short time. ( We know for sure E=MC^2, it's just an engineering detail how to convert a microgram of matter into gallons of equivalent fuel. ).

It'll be the end of the petroleum industry, power grid, and many others.

Aside from the possibility of Panasonic becoming a battery supplier to others in the reasonalby near-term, what happens WHEN (not if) the next vehicle battery technology begins to emerge? The range problem facing electric cars is still a key obstacle to broad adoption. Some large and small companies are working hard and fast on fixing that. LI batteries are just a step on the path toward the power source needed to allow the EV market to really take off. One question would be how fast could this factory be converted to a next-generation battery manfacturing technology as it becomes viable?

It is going in Reno Nevada, I live there, they have already cleared the land for the pad for the building the past month.

Unfortunately, they could backtrack and pick a different state, they are expecting the state to throw in 10 percent in concessions/taxbreaks/cash/improvements. Thats 400-500 million. The most Nevada has ever conceeded was to an Apple server farm last year in the same desolate business park and that was 89 million and the legistlator passed laws to never do that again apparantly.

Texas is the only state that could bribe them with that kind of money.

Apparantly Musk tweeted to the Nevada governor: "The ball is now in your court"